Faux leases, faux tenants hid couple's $700,000 profit on illegal hotels across 14 residential properties

Reminder: the term-of-art for AirBnB's business model is "Tax Fraud".

San Francisco City Attorney Dennis Herrera today threw the book at pair of city landlords who, having already settled a suit charging they were operating more than a dozen illegal Airbnb hotels across the city, allegedly spent the last two years fabricating an elaborate scheme to continue cashing in hundreds of thousands of dollars running unlawful short-term rentals. [...]

"Each of the 8 properties inspected had been staged to appear as if a tenant lived there, but it was obvious that it was a ruse. Every apartment had the same staging: the same Costco food items scattered about, the same arrangement of dirty breakfast dishes in every kitchen sink, same personal products in each bathroom, same damp towels artfully draped over doors as though someone had recently showered, the same collection of shoes and clothes in closets, and same houseplants in each apartment."

"Defendants also submitted six faux leases to create the appearance that certain apartments were rented to genuine tenants, then positing that the tenants were conducting unsanctioned illegal short-term rentals. However, the purported tenants were in fact Defendants' friends, family, employees and/or associates merely posing as tenants." [..] Tellingly, all but one of their Airbnb host accounts was created using the same IP address. [...]

"While teachers, families and long-time residents are struggling to stay in their homes, the Lees were taking precious housing and turning it into an illegal hotel chain," summed up Herrera. [...]

At a max of $6,000 per violation and more than 5,000 violations, the ceiling for this litigation exceeds $30 million. But the city instead requested the "more modest civil penalty" of $5.5 million, plus fees for "well over 400 attorney hours, 250 paralegal hours, and 80 investigator hours unraveling Defendants' scheme and bringing this Motion to Enforce."

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8 Responses:

  1. MattyJ says:

    For lack of a better place to ask, are we residents of SF going to get a JWZ mayoral voting guide for June?

    • jwz says:

      Leno, then Kim, and under no circumstances Breed.

      Find out what Ron Conway wants and always do the opposite of that.

      It's going to be a weird election, because it's almost certain to be close enough that ranked-choice voting will come into play, so the winner will probably be decided by second-choice or third-choice votes. scenarios here.

  2. Cookie Wolf says:

    Guillotine sales soar...

  3. apm says:

    Love the commitment to the game, if not the lack of originality.

  4. mr_mercer says:

    Left out was any discussion how they had finances for 14 presumably $800K+ properties. Something even more sketchy was going on there than just running a gypsy hotel. Mob money? The banks were in on the plan?

  5. Sheila Marie says:

    Makes me sad that we've done away with tarring, feathering, and riding out of town on a rail.

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